Prosecutors in Andersen Trial Allege Partner Evaded Questions

HOUSTON – Prosecutors in the criminal trial of Arthur Andersen LLP Friday sought to link what they said were a senior accountant's evasive answers with an effort to obstruct an investigation into energy trader Enron's books.

Prosecutors said Thomas Bauer said in a deposition he did not remember discussions last fall about destroying documents and a potential Securities and Exchange Commission inquiry into Andersen's records.

Yet, prosecutor Andrew Weissmann said, Bauer's colleagues told FBI agent Paula Schanzle that Bauer told them to "get in compliance" with the firm's document retention and destruction policy a few weeks before the SEC issued a subpoena.

He accused Bauer, who was a lieutenant to chief Enron auditor David Duncan, of having a "guilty state of mind" when he was interviewed.

"He denied knowledge of events we clearly think he did have knowledge of and would have recalled," Weissmann said in a hearing outside the jury's presence Friday.

Bauer, citing his Fifth Amendment rights against self-incrimination, has declined to testify.

Prosecutors contend that Andersen intended to get rid of sensitive material ahead of the SEC probe into Enron's complicated finances last October and November.

Andersen says it was only cleaning up its files and getting rid of extraneous or redundant documents.

Andersen attorney Rusty Hardin told jurors that Andersen has cooperated with the more than 23 legal entities that have issued 40 subpoenas. Since last autumn, Andersen has provided 5,770 work papers, 1,800 boxes of desk files and 3,000 server backup tapes, he said.

Prosecutors also Friday introduced e-mails reconstructed by Andersen after they were deleted last autumn.

Schanzle said about 29,250 e-mails were deleted and 26 trunks of paperwork were shipped off. Prosecutors have implied the paperwork was destroyed.

On cross-examination, however, Schanzle acknowledged she didn't know the information in many of the e-mails and that the FBI was unaware when most of them were deleted.

"If you can't tell us what was deleted and you can't tell us when, what are we supposed to conclude from 29,250 deleted e-mails?" Hardin asked.

Schanzle is the last of 16 prosecution witnesses scheduled to be called before Hardin was to begin his case. The trial is scheduled to resume Monday.